Outfitting the troops beyond parkas and ponchos

DSN Retailing Today, Oct 25, 2004 by Emily Scardino

While the military look is always in style at AAFES, one might not guess that a recent best-selling SKU was a set of men's burgundy silk pajamas. Knowing that this rather posh after-hours item would be a winner is Jim Moon's job. He serves as gmm and vp of apparel at AAFES, running the company's extensive assortment of men's, women's and children's wear, footwear, jewelry and handbags, as well as cosmetics and fragrances.

"We're basically really a cross between a department store and a discounter," said Moon, noting that his customers range from pay grades of an E1 to an 06, from private to officer, giving him a broad range of budgets, age demographics and tastes to cater to.

In total, apparel is one of the most important merchandise categories at AAFES. Of the company's $7.8 billion in annual revenues during fiscal 2003, about $802 million came from clothing and footwear. Of this figure, men's, as would be expected, brought in about $283 million, while women's brought in about $237 million. About $130 million came from children's wear, including infant and toddler apparel. Not including combat boots--though military attire is available through AAFE--footwear brought in $152 million.

Another category that is extremely important to Moon's bottom line is jewelry. Both fashion and fine jewelry are key. While fashion or costume jewelry earns about $17 million per year, fine jewelry far outshines this number at $103 million. While regulations forbid AAFES to sell diamond solitaires larger than a carat except overseas, Moon notes that the engagement ring business is booming. Cluster rings of more than a carat, as well as diamond anniversary and wedding bands are also popular. Designer watches from houses including Gucci are also bestsellers, while Seiko and Timex also retain an audience.

While khakis and camouflage may be the first looks that come to mind when considering our men and women in uniform, Moon pointed out that fashion is actually essential to marketable assortments.

"It is important that we stay very close to trends: our customer range goes from age zero to 100, including numerous retirees, and it is very important to show that we are up to date with the latest trends with the brands that are popular in the market," noted Moon. He added that the percentage of certain brands is higher at bases that have a higher demand for certain styles due to age demographics.

After all, the military is full of young customers, in some cases fresh out of high school, who want to purchase juniors brands like Mudd and l.e.i. and young men's labels, including Sean Jean and Tommy Hilfiger. In fact, AAFES successfully retails all of these brands, along with department store labels, including DKNY, Nautica and Ralph Lauren's Chaps and Polo labels. National brands comprise about 79% of assortments.

Prestige national brands are especially crucial during holiday, which spurs not only fine jewelry and watch sales but sales of some high-end handbag labels as well, including Coach and Dooney and Bourke handbags.

However AAFES also represents current fashion designs in the 21% remainder of its assortment. To meet demand for urban styles at affordable prices, the company recently introduced a juniors and young men's casual line with a hip military-inspired name: Decoded. The brand is already one of the company's best sellers, aimed at a demographic between the ages of 18 and 23.

Another private label initiative is ID Tags, a children's brand for size 7-14 girls and 7-16 boys. The fittingly named New Recruits line offers maternity and infant wear.

All three of these new private brands are already in stores and performing up to code, according to Moon.

"I think that one of the biggest changes is that the market is not as brand driven as it has been in the past and more accepting of the private label merchandise. I think that has been the biggest surprise in retail. My sell-throughs are at 75% for the Decoded brand right now; merchandise is flying right out the door. My customer has accepted this brand; it's great looking merchandise, good looking, a good fit and the best quality we can offer for the price, from $7.99 to $29.99."

While active military personnel are generally physically fit, and adult women will purchase juniors jeans in many cases, Moon noted that, "we do sell a good bit of plus size apparel, both in our Passports private label in tops and bottoms and in national brands like Lee." The company is not, however in the husky boys business or the men's big and tall business in its private label.

Since mid-tier and mass retailers typically line the highway on the way into a base, Moon is careful to provide the right balance of brands and merchandise.

"We don't carry Wrangler, but we have Levi's Red Tab, our top men's denim brand, and in women's, while Mudd and 1.e.i. sell best in juniors, we have Levi's in ladies' sizes as well."

Whether branded or private label, Moon summed up his strategy in that, "My customer in the U.S. is going to shop in Wal-Mart and Target--they are my competition. My goal is to provide the best quality product at the best price."